Cities Outlook 2017: Brexit and devolution

The Centre for Cities, a research and policy institute aiming to improve the economic success of UK cities, has just published its 10th annual analysis of economic data for the UK’s 63 largest towns and cities. To mark the occasion they held a briefing session and discussion at London’s City Hall.

Their Cities Factbook provides a wealth of data on the characteristics of places as different as Worthing, Belfast, Sunderland and London. An invaluable resource for researchers in the field. The accompanying Cities Outlook report includes 18 tables of comparative analysis of the towns and cities, covering areas such as employment rates (highest, Crawley), wages (London), inequality (most unequal, Oxford and Cambridge) and CO2 emissions per capita (lowest, Chatham).

Perhaps more interestingly, the report also looks at the geography of exports in the run-up to Brexit. It reports on particular issues facing ‘one-company towns’ in the UK – the most extreme being Sunderland. The destination of exports is also analysed – 70% of Exeter’s exports go to the EU, while 46% of Hull’s go to the USA. The EU is the largest export market for almost every city, 46% of all cities’ exports are sent there. There is a divide between services and goods exports -with many goods coming from the North, and services from the South.

The election of six new metro mayors in 2017 represents a new level of devolution that could address the apparent disconnect from government apparently felt by many. The new mayors’ powers (although not all the same) should enable them to tackle the particular challenges and opportunities in their areas. The leads on to advocating a “place-based” industrial strategy.

The discussion session was opened by Stephanie Flanders, ex-BBC economics editor, Chief Market Strategist at JP Morgan and Chair of the RSA Inclusive Growth Commission. She also reviewed the relationship between productivity and place and the fact that regional variations meant a need for a granular strategy. She also opened up the issue of “place-based” budgets as a way of improving the efficiency of local spending.

Marvin Rees, Mayor of Bristol, extended the debate to cover the diversity of cities, highlighting the number of languages spoken in Bristol. He is also a member of the Global Parliament of Mayors, and is very active in bringing UK city leaders together to lobby for common causes – control over local budgets being high on the list. He highlighted the dilemma that arguing for a particular city’s needs tends to be sub-scale, while bringing them together risks division in what can be seen as a zero-sum budgeting game.

Martin Reeves Interim Chief Executive, West Midlands Combined Authority made similar points about the opportunity of a “place-based” industrial strategy and was looking forward to the opportunities offered by devolution.

In the Q&A that followed there was much discussion of local finance, either through regional banks, municipal bonds or local tax-raising powers (eg business rates). It was felt that SMEs in particular were getting a poor service from the finance sector. Marvin and Martin were (unsurprisingly) keen, as is Sadiq Khan, on local tax-raising powers, but Stephanie Flanders argued only for local spending powers on the grounds that some cities would not be able to raise as much as others.

The relationship with Brexit was also a major concern, requiring close communication between Government and the cities. Marvin said that, immediately after the vote, Bristol set up a working party to identify the local implications and submitted a detailed paper to Liam Fox – but they have yet to get a reply.

The issue of “post-code lottery” emerging from “place-based” spending plans didn’t come up – but must surely be of concern to many. The technological challenges of AI and robotics will also affect cities differently, and should be high on mayors’ list of issues to address.

Written by Huw Williams, SAMI Principal.

The views expressed are those of the author and not necessarily of SAMI Consulting.